There are no easy answers to this. Of course we must tackle poverty and inequality through measures such as the Living Wage. We must also try to change the culture around finances and make it easier for people to save for the future, promote credit unions, and make free financial advice easier to access.
On top of this is the problem of lenders targeting people in difficult situations with loans and credit with an extremely high interest rate.
I’ve previously campaigned for regulation of the Payday Loans industry, for example. Interest rates offered by these companies were through the roof and trapping people in a cycle of debt that was impossible to break. Campaign efforts led to stronger regulation and a new cap on the total cost of credit at 100%.
This week I met with staff at Bolton Citizens Advice Bureau to discuss how other financial products continue to rip off vulnerable people in my constituency.
Logbook loans, doorstep loans, mail order catalogues, pawnbroker loans and rent to buy schemes are not covered by the interest cap on payday loans.
1 in 12 people who seek debt advice from Citizens Advice have taken out one of these high cost credit products, they are often living in social housing and 1 in 3 are single parents. Half of those using high cost credit receive some kind of disability benefit. Like payday loans the products tend to be targeted at the most financially vulnerable members of our community.
I want to see tougher regulation of these services. The Financial Conduct Authority is undertaking a review of High Cost Credit and this is a good opportunity to follow the example of payday loan regulation and cap the total cost of credit at 100%. I will be making representations in support of this.
Nobody should find themselves at risk of exploitation because of an unexpected bill.